Chaudhari said that SBI requires Rs 20,000 crore over the next three years. And there are various ways of raising this money, the bank intends to go to the government with several options. The options will depend on the level of holding the government would want to keep.

He was quoted by DNA as, "If it wants to maintain the current 59%, we have suggested rights issue. If it is open to bringing it down to 55%, we have suggested a combination of rights issue, a follow-on offer and placement with institutional investors".

Based on the governments preference the fund shall be raised, Chaudhuri then added that the finance minister is scheduled to address the bank"s board on August 6.

SBI took Rs 7,500 crore from Tier I capital to fund its pension liability in the previous quarter (Q4FY11). This has brought down its capital adequacy ratio (CAR) for Tier I from 9% to 7.72%

This CAR ratio will be brought back using a combination of profit generation during 2011-12 and part through fund infusion during the proposed rights issue.

Chaudhari claimed that the country"s largest public bank will post normal profits from third quarter after it has taken care of the higher provisioning norms set by the central bank of the country.

“Normal profit can be expected maybe in third quarter. Some more of provisioning for the provision coverage ratio is still there, which is about Rs 500 crore per quarter during the first and the third quarter," he said.

OneIndia Money